Case Doc 154 Filed 11/19/12 Entered 11/19/12 17:51:39 Main Document Pg 1 of 10

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1 Case Doc 154 Filed 11/19/12 Entered 11/19/12 17:51:39 Main Document Pg 1 of 10 IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF MISSOURI EASTERN DIVISION IN RE: BURTON DOUGLAS MORRISS, Debtor, PULASKI BANK, Movant, vs. BURTON DOUGLAS MORRISS, Debtor, and CHARLES W. RISKE, Trustee Respondents. Case No.: Chapter 7 MOTION FOR RELIEF FROM AUTOMATIC STAY FILED BY PULASKI BANK Daniel J. McNamee King, Krehbiel & Hellmich, LLC 2000 South Hanley Road St. Louis, MO (314) RESPONSE DATE: December 3, 2012 HEARING DATE: December 10, 2012 HEARING TIME: 10:00 a.m. COURTROOM: 7 North NOTICE OF HEARING AND MOTION FOR RELIEF FROM AUTOMATIC STAY BY PULASKI BANK WARNING: ANY RESPONSE OR OBJECTION MUST BE FILED WITH THE COURT BY DECEMBER 3, A COPY MUST BE PROMPTLY SERVED UPON THE UNDERSIGNED. FAILURE TO FILE A TIMELY RESPONSE MAY RESULT IN THE COURT GRANTING THE RELIEF REQUESTED PRIOR TO THE HEARING DATE. THE HEARING, AS STATED ABOVE, WILL BE HELD BEFORE THE HONORABLE KATHY A. SURRATT-STATES IN COURTROOM NO. 7 NORTH IN THE UNITED STATES BANKRUPTCY COURT, UNITED STATES COURTHOUSE, THOMAS EAGLETON US COURTHOUSE, 111 S. 10TH STREET, ST. LOUIS, MO COMES NOW Pulaski Bank ( Movant ), pursuant to 11 U.S.C. 362(d)(1) and (2), and moves this Court for its Order granting relief from the automatic stay. As grounds for its Motion, Movant states as follows:

2 Case Doc 154 Filed 11/19/12 Entered 11/19/12 17:51:39 Main Document Pg 2 of This Motion is brought pursuant to 11 U.S.C. 362 and Bankruptcy Rule This Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334 and Local Rule 9.01 of the United States District Court for this District. This is a core proceeding pursuant to 28 U.S.C. 157(b)(2). Venue is proper pursuant to 28 U.S.C This is a contested matter under Bankruptcy Rule Debtor Burton Douglas Morriss ( Debtor ) filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (the Code ) on January 19, 2012 (the Petition Date ). 3. On February 13, 2012, the Court converted the case to one under Chapter Debtor is, among others, a beneficiary under the BDM 2000 Irrevocable Trust dated June 15, 2000 (the Trust ). 5. On November 1, 2004, the Trust executed a Note executed a note identified as Loan No. XXX-XXX0395, evidencing a loan from Movant to the Trust in the original principal amount of $3,950,000, which was most recently renewed on November 8, 2011 for the original principal amount of $3,268, (the Note ). A true and accurate copy of the Note is attached hereto as Exhibit The Note is secured by a Deed of Trust (the Deed of Trust ) dated November 1, 2004 and recorded on November 4, 2004 in the Office of Recorder of Deeds for the County of St. Louis, State of Missouri, at Book 16187, Page 0485, encumbering the real property located at #3 St. Andrews, Ladue, MO 63124, which is more particularly described as follows: LOT 3 OF NEW ST. LOUIS COUNTRY CLUB SUBDIVISION, A SUBDIVISION IN ST. LOUIS COUNTY, MISSOURI, ACCORDING TO THE PLAT THEREOF RECORDED IN PLAT BOOK 6, PAGE 80 OF THE ST. LOUIS COUNTY RECORDS, 2

3 Case Doc 154 Filed 11/19/12 Entered 11/19/12 17:51:39 Main Document Pg 3 of 10 (the Property ). A true and accurate copy of the Deed of Trust is attached hereto as Exhibit The Deed of Trust was modified pursuant to Modification of Deed of Trust (the Modification ) dated July 7, 2006, and recorded July 31, 2006 in Book Page A true and accurate copy of the Modification is attached hereto as Exhibit The Note is also secured by separate Commercial Guaranties (collectively the Guaranties ) executed on November 1, 2004 by Debtor and the Burton Douglas Morriss Irrevocable Trust dated March 6, True and accurate copies of the Guaranties are attached hereto as Exhibits 4, 5 and Pursuant to the Note, the Trust was required to make monthly payments to Movant of principal and interest in the amount of $22, on or before the 8 th day of each month beginning on December 8, 2011, through and including November 8, 2012, together with one final payment of unpaid outstanding principal and accrued but unpaid interest due thereon on November 8, The Trust has failed to make payments on the Note due September 8, 2012, October 8, 2012 and November 8, 2012, and is in default under the Note, which by its terms matured on November 8, As of November 13, 2012, the following sums were due and owing from the Trust to Movant under the Note: 3

4 Case Doc 154 Filed 11/19/12 Entered 11/19/12 17:51:39 Main Document Pg 4 of 10 Principal: $3,221, Interest: $54, Late Charges: 83, Total $3,359, with interest accruing at the rate of $ per day thereafter. 11. Movant seeks to enforce the Note and Deed of Trust as by law allowed. No creditor of the Bankruptcy Estate has any interest in the Property superior to the rights of Movant. 12. The Trust is the owner of the Property. 13. As Debtor is a beneficiary of the Trust, Movant is uncertain whether the Bankruptcy Estate may claim an interest in the Property, and Movant seeks an order from the Court confirming the Bankruptcy Estate has no such interest in the Property and/or abandoning same. 14. Upon information and belief, Debtor is occupying the Property as his primary residence. In the event Movant is allowed to proceed with foreclosure of the Deed of Trust, Movant anticipates it will need to commence state law eviction proceedings following foreclosure and accordingly, seeks relief from the Automatic Stay U.S.C. 541(c) provides in pertinent part an interest of the debtor in property becomes property of the estate... [except that]... a restriction on the transfer of a beneficial interest of the debtor in a trust that is enforceable under applicable non-bankruptcy law is enforceable in a case under this title., 16. Mo.Rev.Stat provides in pertinent part: 3. With respect to an irrevocable trust with a spendthrift provision, a spendthrift provision will prevent the settlor's creditors from satisfying claims from the trust 4

5 Case Doc 154 Filed 11/19/12 Entered 11/19/12 17:51:39 Main Document Pg 5 of 10 assets except: (1) Where the conveyance of assets to the trust was fraudulent as to creditors pursuant to the provisions of chapter 428; or (2) To the extent of the settlor's beneficial interest in the trust assets, if at the time the trust became irrevocable: (a) The settlor was the sole beneficiary of either the income or principal of the trust or retained the power to amend the trust; or (b) The settlor was one of a class of beneficiaries and retained a right to receive a specific portion of the income or principal of the trust that was determinable solely from the provisions of the trust instrument. 4. In the event that a trust meets the requirements set forth in subsection 3 of this section, a settlor's creditors may not reach the settlor's beneficial interest in that trust regardless of any testamentary power of appointment retained by the settlor that is exercisable by the settlor in favor of any appointees other than the settlor, the settlor's estate, the settlor's creditors, or the creditors of the settlor's estate. 17. The document by which the Trust was created provides in pertinent part: 5

6 Case Doc 154 Filed 11/19/12 Entered 11/19/12 17:51:39 Main Document Pg 6 of 10 *** 18. Based on the foregoing provisions of the Trust, it is evident that (i) the Trust is 6

7 Case Doc 154 Filed 11/19/12 Entered 11/19/12 17:51:39 Main Document Pg 7 of 10 irrevocable and contains a spendthrift provision; (ii) at the time the Trust became irrevocable, the Debtor, settlor, was not the sole beneficiary and did not retain a power to amend the trust, nor was he one of a class of beneficiaries that retained a right to receive a specific portion of the income or principal of the Trust determinable solely from the provisions of the Trust instrument; and (iii) the Trust was created under the laws of the State of Missouri. 19. Accordingly, the creditors of Debtor may not reach Debtor s beneficial interest in the Trust pursuant to Missouri law and therefore, Debtor s beneficial interest in the Trust is not property of the Bankruptcy Estate under 11 U.S.C. 541(c). 20. Pursuant to 362(d)(1) of the Code, the automatic stay may be modified or terminated for cause, including lack of adequate protection of an interest in property U.S.C. 362(d)(1). Moreover, under 362(d)(2), the automatic stay shall be terminated with respect to a stay of an act against property... if (A) the debtor does not have equity in such property. 11 U.S.C. 362(d)(2). 21. The sum of $3,359, is due and owing Movant on the Note and Deed of Trust as of November 13, Debtor is continuing to use the Property and the Property continues to depreciate. 23. Movant s interest in the Property is not adequately protected within the meaning of 361 and 362(d)(1) of the Code. The lack of adequate protection of Movant s interest in the Property constitutes cause for lifting the Automatic Stay under 362(d)(1) of the Code. 24. As Debtor does not own the Property, and because it is not property of the Bankruptcy Estate, there is no equity in the Property for the direct benefit of Debtor or for benefit of the Bankruptcy Estate and relief is proper under 11 U.S.C. 362 (d)(2). 25. This Court should grant Movant the relief requested herein and permit Movant to 7

8 Case Doc 154 Filed 11/19/12 Entered 11/19/12 17:51:39 Main Document Pg 8 of 10 pursue all rights and remedies available to it with respect to the Property. WHEREFORE, Movant prays this Court enter an Order terminating the automatic stay with regard to the Property, effective immediately pursuant to Rule 4001(a)(3), and abandoning the bankruptcy estate s interest therein in order to permit Movant to proceed with foreclosure thereon, to pursue its remedies under state law in connection with the Deed of Trust, and to pursue its remedies under state law for possession of the Property after foreclosure, and for such other relief as the Court deems just and proper. Dated this 19 th day of November, 2012 Respectfully submitted, KING, KREHBIEL & HELLMICH, LLC By: /s/ Daniel J. McNamee. DANIEL J. McNAMEE #56685MO 2000 South Hanley Road St. Louis, MO (314) (314) (fax) dmcnamee@kkhhb.com Attorneys for Pulaski Bank CERTIFICATE OF SERVICE The undersigned hereby certifies that a true and accurate copy of the foregoing was served this 19 th day of November, 2012, by means of the Court s CM/ECF system or via first class mail, postage prepaid, upon the following: Burton Douglas Morriss 3 St. Andrews Drive St. Louis, MO Peter D. Kerth Jenkins & Kling, P.C. 150 North Meramec Avenue, Suite 400 St. Louis, MO pkerth@jenkinskling.com 8

9 Case Doc 154 Filed 11/19/12 Entered 11/19/12 17:51:39 Main Document Pg 9 of 10 Leslie L Lane Lane Law Firm, LLC 208 N. Rolla St. Rolla, MO lanelaw@fidnet.com David W. Baddley U.S. Securities and Exchange Commission 950 East Paces Ferry Road Suite 900 Atlanta, GA baddleyd@sec.gov Robert E. Eggmann Desai Eggmann Mason LLC 7733 Forsyth Boulevard, Suite 2075 Clayton, MO reggmann@demlawllc.com Gregory F. Herkert The Stolar Partnership LLP 911 Washington 7th Floor St. Louis, MO gherkert@stolarlaw.com Cheryl A. Kelly Thompson Coburn One US Bank Plaza St. Louis, MO ckelly@thompsoncoburn.com Jay Samuels 120 Albany St Plaza, Ste 100 New Brunswick, NJ David A. Sosne Summers Compton Wells PC 8909 Ladue Rd. St. Louis, MO dasattymo@scwpclaw.com 9

10 Case Doc 154 Filed 11/19/12 Entered 11/19/12 17:51:39 Main Document Pg 10 of 10 Linda S. Tarpley Singer, Tarpley & Jones, P.A. P.O. Box Kansas City, MO Frank Hilton Tomlinson Tomlinson Law, LLC 2100 First Avenue North Landmark Center Suite 600 Birmingham, AL Charles W. Riske Attorney at Law 231 S. Bemiston, Suite 1220 St. Louis, MO Martha M. Dahm Office of U.S. Trustee 111 S. 10th St., Ste St. Louis, MO Office of the U.S. Trustee 111 S. 10 th Street, Suite 6353 St. Louis, MO /s/ Daniel J. McNamee 10